Carrier to Enter Chinese Residential A/C Market
Apr 27, 2005
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HVAC equipment maker Carrier Corporation is expected to make a bold foray into the Chinese residential air-conditioning market, challenging companies already experiencing intense competition.
Geraud Darnis, president of Carrier, the world's largest provider of heating, air conditioning and commercial refrigeration solutions, confirmed that the company will enter the Chinese market, but would not say when.
He was speaking at a news conference for the ground-breaking of the company's global research & development (R&D) centre in Shanghai.
Carrier is currently focused on the commercial air-conditioning market in China, but at the global level, it specializes more in the residential market with a reported 60-percent share of its business.
"We intend to lead all markets in all segments," Mr. Darnis said.
The residential air-conditioning business will be another growth engine for Carrier's revenue in China, which rose by 20 percent to U.S. $500 million last year. The company's global revenue totaled $10.6 billion, an increase of 15 percent. The figure is twice as large as its nearest competitor.
Mr. Darnis said Carrier will set up a distribution joint venture for residential air-conditioning systems in China.
The company has taken its first step into the residential market by teaming up with Midea, which is China's second biggest player in the air-conditioning market and is well positioned in both the residential and light commercial sectors.
Toshiba Carrier Corp., Carrier's joint venture in Japan, completed a deal to acquire 20 percent of the air-conditioning division under Midea Electric Appliances Co. early this year. Under the terms of this agreement, Midea will produce residential and light commercial air-conditioners primarily under the Midea and Toshiba brands, as well as for original equipment manufacturer customers.
"Midea is a competitive company and we have high hopes to develop this joint venture well," Mr. Darnis said.
Toshiba Carrier has the option of increasing its share in the Midea joint venture.
When asked whether Carrier will produce its residential air-conditioners in China by setting up wholly-owned plants or working with a local partner, Mr. Darnis said all options are open. Carrier has seven manufacturing plants in China, mostly launched with local partners.
Carrier has decided to move into the residential air-conditioning market when competition is already fierce, but Mr. Darnis is not concerned. "China is no different and we believe we will lead the market as we do around the world," he said.
He believes customers will prefer more sophisticated products, which Carrier has supplied in other developed markets.
Carrier will spend approximately $50 million in China over the next 5 years on R&D, including on setting up an R&D center, located at Jinqiao, Pudong. The center has already started construction and is scheduled to be fully operational by 2008.
In October last year Carrier, opened a $15-million compressor manufacturing center in Yileng, the company's largest joint venture in China to date. Also in 2004, Carrier moved its China regional headquarters from Hong Kong to Shanghai. (China Daily)
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